India Joins Scramble for African Farmlands

New Delhi – Indian-owned companies have joined the race with China, Saudi Arabia, Kuwait, South Korea and the European Union in acquiring farmlands in Africa “at throwaway prices, indulging in environmental damage and exporting the food while locals continue to starve,” says a new research report.

“These atrocities . . . are shockingly similar to what India used to blame rich western countries for,” avers the report titled ‘India’s Role in the New Global Farmland Grab’ and written by Rick Rowden, which has been published by ‘GOI Monitor Desk‘, a non-profit magazine dedicated to the cause of monitoring the functioning of Centre and State governments in India.

The origin of India’s practice of procuring farmland in Africa is traced back to the food crisis of 2008 when rich countries were forced to confront the reality of how fragile the global food scenario can be, especially for those without sufficient cultivable land.

To ensure more direct control over food, these countries started acquiring land in poorer African countries and shipping the produce back home. A recent World Bank report found that 45 million hectares of large scale farmland deals had been announced between 2008 and 2009.

The initial support to such forays was based on the belief that the world is facing scarce food supply because of long-term under-investment in the agricultural sectors of many developing countries.

However, as stressed by the United Nations Special Rapporteur on the Right to Food, “the diagnosis and remedy are incorrect . . . . Hunger and malnutrition are not primarily the result of insufficient food production; they are the result of poverty and inequality, particularly in rural areas, where 75 per cent of the world’s poor still reside.”

Outsourcing Farming

“There are various factors driving the ‘outsourcing’ of domestic food production in India,” writes Rowden. Primary among these are stagnation or drop in crop yield due to “green revolution fatigue”, government’s concerns related to long term food security besides the allure of much cheaper land and more abundant water resources in African countries.

“The subsidies being offered by governments of African countries is another enticement. In many cases, the companies have been offered special incentives, including the offer to lease massive tracts of arable land at very generous terms with access to water and the ability to fully repatriate the profits generated,” adds the report.

Figures provided by governments of various East African countries in 2010 indicate that more than 80 Indian companies have invested some $2.4 billion in buying or leasing huge plantations in Ethiopia, Kenya, Madagascar, Senegal and Mozambique to grow food grains and other cash crops for the Indian market.

The high input cost of farming is also driving these companies to explore Africa. Talking to Indian news agency IANS earlier in 2011, S.N. Pandey, an executive with Lucky Group, one of the companies which have invested in Africa, stressed on the price factor. “The cost of agricultural production in Africa is almost half that in India. There is less need for fertiliser and pesticides, labour is cheap and overall output is higher,” he was quoted as saying.

African Farmlands Are Much Cheaper

Indian agriculture companies also complain that India’s small and fragmented land holdings are unsuitable for large-scale commercial farming, and there are too many bureaucratic hurdles to investment. Recent offers by African governments allow Indian farmers to acquire much larger tracts of contiguous land on lease for 50 years, and in some cases even up to 99 years at throwaway prices.

Rowden quotes a news report in the Indian Express: “The land lease rate in Punjab’s Doaba region is a minimum of Rs 40,000 (about $760) per acre (0.404685642 hectares). In contrast, in most African nations, the land lease rate in terms of Indian currency comes to Rs 700 ($13.30) per acre.

This means that for every one acre in Punjab, Indian investors can own 60 acre in Africa. With a per capita land holding of 1.5 acre in Punjab, agriculture is ceasing to be a sustainable activity.”

Locals Ignored

Rowden writes: “In some countries such as Ethiopia, where there is a lack of effective governance and democracy, local populations have reportedly suffered evictions with no recourse. Of all the land-grabbing deals in recent years, perhaps none has received as much attention as that of Karuturi Global’s massive land leases in Ethiopia’s Gambela region. While the East African country claims the entry of foreign investors would help develop the large tracts of wastelands, experts say there is no such thing as ‘waste or idle land’ in Ethiopia, or anywhere in Africa.”

The report refers to several studies that have shown that local competition for grazing land and access to water bodies are the two most important sources of inter-communal conflict in most parts of Ethiopia populated by pastoralists.

“Indeed, in almost every case of recent land leases involving foreign enterprises, locals have complained that they lost access to grazing land and water due to these projects. This has also been the case, for example, with foreign investments in both the Bako and Gambela regions of Ethiopia where many Indian firms operate,” says the report.

Hundreds of Families, Displaced

It adds: “Proponents of the new land rush also often claim that the foreign investments in land will create jobs for locals, improve living conditions and increase national GDP (Gross Domestic Product). In Ethiopia, over 3 lakh (three hundred thousand) families have been potentially displaced but only about 20,000 people are expected to get jobs on the new highly-mechanised farms.”

According to the documents available with Solidarity Movement for a New Ethiopia (SMNE), the locals were made aware of the plan to lease out their ancient lands and “secret forests” only in early 2010. They approached the Ethiopian President Girma Wolde-Giorgis, who mostly has representative powers, and won his support.

The Environmental Protection Authority of Ethiopia (EPAE) also recommended that the lease project be stopped since the short-term benefits of leasing would not outweigh the long-term costs to the country.

However, the local Governor announced that the 3,000 hectare of forests had already been leased out for 50 years. Despite another intervention by the President, the project is moving forward and the forests are being cleared, says the report.

“If what is going on in Gambela was happening in New Delhi, India, or in Oxford, England, Bismarck, North Dakota, or in Saskatoon, Canada, this would be unthinkable. If it is not allowed in these places, why is it justified in Ethiopia,” asks Obang Metho of SMNE.

Just Business

“Indian companies reject their characterisation as neo-colonials and insist they are just doing business,” says the report. Many companies claim the land acquisitions are simply strategies for their expansion and vertical integration.

Raju Poosapati, the vice president of India’s Yes Bank, which advises Indian investors in Africa, said a government ban on non-Basmati rice exports had driven Indian companies to go abroad in order to be able to grow and sell it in global markets.

Karuturi Global Ltd. clarified that it pays its workers at least Ethiopia’s minimum wage of 8 birr, and abides by Ethiopia’s labour and environmental laws.

Speaking to Bloomberg, Sai Ramakrishna Karuturi, founder and head of Karuturi Global Ltd., said: “We have to be very, very cognisant of the fact that we are dealing with people who are easily exploitable,” adding that the company will create up to 20,000 jobs and has plans to build a hospital, a cinema, a school and a day-care centre in the settlement.

“We’re going to have a very healthy township that we will build. We are creating jobs where there were none,” he said. However, Metho says so far there has been no sign or mention of any of this according to reports from the local people.

The research report points out that the situation seems quite similar to what foreign corporates are doing in tribal areas of Orissa and Chattisgarh in India. Metho believes a close coordination between Indian and African activists can help serve the cause of marginalised communities in both the worlds.